In the best year for the freight transportation industry since the Great Recession, logistics managers chalk up efficiencies that drive further U.S. economic growth. However, capacity issues persist, causing shippers to worry about rate hikes as carriers continue to be meticulous in their partnerships.

Does your organization struggle with the integration of information between your internal systems, processes and partner portals? You're not alone! Kapow Software alongside EFT has surveyed over 200 organizations regarding the importance of information access, visibility and discusses some of the major goals for supply chain and logistics organizations.

During this webcast we'll explore how supply chain execution convergence (SCEC) helps break down the barriers resulting from disparate, fragmented technology solutions allowing you to more effectively serve customers, adapt to changing business cycles, and save both money and resources.

Prior to the release of the 21st annual State of Logistics report by the Council of Supply Chain Management Professionals (CSCMP) at the National Press Club last week, Penske Logistics gave LM an exclusive interview on some of the details. As the principal sponsor of the report, Penske also had some industry insider intelligence to share on the impact made by the two-year recession first felt in 2007.

Interview with Vince Hartnett, President, Penske Logistics

Vincent W. Hartnett, Jr., the company’s president, said that last year Penske’s leasing was affected by lower business activity, but has been ramping up since the last quarter of 2009, with fewer reductions in overall service.

“Food and beverages were not hit as hard as the manufacturing sectors, he added, noting that contract logistics in all sectors is coming back.

“Year to date, signs are improving, with about 60 percent of that in the logistics wing. But it’s not a tide that will make all ships rise,” noted Hartnett.

“Regional growth is spotty and mixed. The NAFTA (North American Free Trade Agreement) countries will have a medium level of improvement and the overseas stars will be China and Brazil. The EU will be the laggard, with most forecasts suggesting just 1 percent growth this year.”

Hartnett stressed that none of this represents a long-term forecast, however.

“Our commercial rental fleet has seasonal surges, and is most sensitive to changes,” he said. “But when the demand is there, we can provide heavy duty trucks for companies that have reduced their own assets.”

Meanwhile, Penske is set on striking up strategic alliances with companies that can respond quickly to market changes and are capable of reducing costs rapidly.

“We are looking out for best practices, and companies with the most agile supply chains,” said Hartnett. “That includes those capable of stripping out capacity when needed.” And that means more manufacturers will be “near-sourcing” in the future, he said. “Not that out-sourcing will necessarily go away,” Hartnett added. “In this global economy, it still makes sense to use low-wage countries for much of the labor, but we see a hybrid emerging where local demand will be taking up a lot of regional inventory.

Consumers in Mexico, for example, will be buying from wholesalers and retailers who have goods made in the region, according to Hartnett. And as a consequence, manufacturers will have to balance their logistics portfolio to ensure a robust supply chain.

In the end, said Hartnett, “cash is king,” and those who protect their capital by not carrying costs and inventory will prevail. “Especially in this tight credit market,” he added. He advises shippers to avoid locking themselves into long-term contracts with distribution centers, and to work closely with supply chain partners.

“It’s still not a good time to be taking chances,” he said. “Smart risk management means taking a collaborative approach. We try to get inside our partner’s business and help them reduce cost by building in efficiency.”

The final key, said Hartnett, is to “execute flawlessly,” while keeping communication channels open and transparent. At the same time, both parties must realize that innovation will remain a shared goal.

About the Author

Patrick BurnsonExecutive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!

Get timely insider information that you can use to better manage yourentire logistics operation.

Recent Entries

While many industry analysts contend that distribution centers near U.S. East Coast ports will see a surge of new business after the Panama Canal expansion, real estate experts say this phenomena is already underway.

A new Government Accountability Office report on the effects of changes to truck driver hours of service rules has sparked a war of words between the American Trucking Associations and Federal Motor Carrier Safety Administration, the arm of the Transportation Department that is in charge of making those rules.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in May dropped 10.8 percent annually to $92.7 billion, following a 6.8 percent annual decline to $93.3 billion in April.

Rumors of transportation and logistics titan UPS acquiring Chicago-based transportation management services provider Coyote Logistics for $1.8 billion have become a reality, with UPS announcing today that the deal is now official.